Citigroup Inc. (C) has begun an Internet bank that offers higher interest rates as part of its plan to attract more online customers and reverse a decline in consumer banking profit.

The company's Citibank unit is offering a 4.5 percent yield on its e-savings account, with no minimum balance required, and in some cases no monthly fees, according to its Web site. Customers, however, must open a linked checking account to get that rate.

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New York-based Citigroup, the largest U.S. bank, is hoping to better compete with such rivals as HSBC Holdings Plc's (HBC) HSBC Direct and ING Group NV's ING Direct in offering online banking.

Many banks, including Citigroup, view online banking as both a source of new customers and a means to increase business with existing customers who prefer to bank through more than one channel.

Existing Citibank checking customers may apply for Citibank Direct online. The maximum online account balance is $250,000.

Last year, profit from Citigroup's consumer banking unit fell 9 percent to $10.9 billion, and in the United States fell 10 percent to $7.17 billion.

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